Overview
In the decision of Westfield Management Limited v AMP Capital Property Nominees Limited [2012] HCA 54, the High Court concluded that members of a managed investment scheme cannot bargain away the rights conferred by Chapter 5C of the Corporations Act.
The decision concerned a dispute between unit-holders in a managed investment scheme. The appellant, Westfield Management Limited as trustee for the Westart Trust (Westfield) held one third of the units in a trust registered as a managed investment scheme under Chapter 5C of the Corporations Act 2001 (Cth)(Scheme). AMP Capital Property Nominees Limited (AMP) held the remaining two-thirds.
The sole property held by the Scheme was a shopping centre in Western Australia.
AMP wished to sell the shopping centre.Westfieldwanted the shopping centre to remain with the Scheme.
The unit holders and the Responsible Entity (AMP Capital Investors Limited) had entered into an agreement which provided, amongst other things, that the Responsible Entity could not sell the shopping centre without the written consent of the unit holders and that unit holders must exercise their voting rights to give effect to the intent and effect of the agreement (Consent Clauses).
To get around the Consent Clauses, AMP exercised its right under Section 601NB of the Corporations Act to call for a meeting of unit holders to vote on the winding up of the Scheme. An inevitable consequence of the winding up of the Scheme would be the sale of the shopping centre and, as AMP held more than 50% of the units, it was in a position to carry that resolution.
Westfield sought and obtained an injunction at first instance preventing AMP from voting on the resolution without the prior consent of Westfield.
The decision was overturned in the New South Wales Court of Appeal. The Court of Appeal found that the restriction in the Consent Clauses on selling the shopping centre did not apply to winding up of the Scheme and therefore AMP would not be voting against the "intent and effect" of that restriction by voting to wind-up the Scheme.
Westfield appealed that decision to the High Court.
The High Court judgment
The High Court dismissed Westfield's appeal. It agreed with the Court of Appeal's construction of the Consent Clauses.
Although the decision ultimately turned on a question of construction, the High Court used the decision to express some significant views about the ability of members of managed investment schemes to bargain away the rights granted to them by Chapter 5C of the Corporations Act. There is no express restriction in the legislation that such rights cannot be contracted out of. However, the High Court stated that where the rights bestowed by legislation are a matter of public interest, such as those provided by Chapter 5C, an attempt to contract out of those rights would be invalid.
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